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Frequently Asked Questions about Estate Planning

Estate planning can often seem overwhelming and confusing. To add some clarity to the process, our attorneys have compiled a list of our FAQs about estate planning in the space below. If you have further inquiries, do not hesitate to contact our office, and we will happily answer your questions.

What is Probate?

Probate is the court and process that looks after people who cannot make their own personal, health care and financial decisions. These people fall into three general categories: Minor Children (under age 18 in most states); Incapacitated Adults; and People who have died without legal arrangements to avoid probate. Probate proceedings can be expensive and time-consuming. Additionally, the court proceeding and associated documents are all a matter of public record. Many people choose to avoid probate in order to save money, spare their heirs a legal hassle, and keep their personal affairs private.

What is Joint Tenancy with Rights of Survivorship? (in some states “Tenancy by the Entirety” when between spouses)

This is the most common form of asset ownership between spouses. Joint tenancy (or TBE) has the advantage of avoiding probate at the death of the first spouse. However, the surviving spouse should not add the names of other relatives to their assets. Doing so may subject their assets to loss through the debts, bankruptcies, divorces and/or lawsuits of any additional joint tenants. Joint tenancy planning also may result in unnecessary death taxes on the estate of a married couple.

What is a Will?

The document a person signs to provide for the orderly disposition of assets after death. Wills do not avoid probate. Wills have no legal authority until the willmaker dies and the original will is delivered to the Probate Court. Still, everyone with minor children needs a will. It is the only way to appoint the new “parent” of an orphaned child. Special testamentary trust provisions in a will can provide for the management and distribution of assets for your heirs. Additionally, assets can be arranged and coordinated with provisions of the testamentary trusts to avoid death taxes.

What is a Living Will?

Sometimes called an Advance Medical Directive, a living will allows you to state your wishes in advance regarding what types of medical life support measures you prefer to have, or have withheld/withdrawn if you are in a terminal condition (without reasonable hope of recovery) and cannot express your wishes yourself. Oftentimes a living will is executed along with a Durable Power of Attorney for Health care, which gives someone legal authority to make your health care decisions when you are unable to do so yourself.

What does Intestacy mean?

If you die without even a Will (intestate), the legislature of your state has already determined who will inherit your assets and when they will inherit them. You may not agree with their plan, but roughly 70 percent of Americans currently use it.

What are Beneficiary Designations?

You may avoid probate on the transfer of some assets at your death through the use of beneficiary designations. Laws regarding what assets may be transferred without probate (non-probate transfer laws) vary from state to state. Some common examples include life insurance death benefits and bank accounts.

What is a Durable Power of Attorney and when do I need one?

These allow you to appoint someone you know and trust to make your personal health care and financial decisions even when you cannot. If you are incapacitated without these legal documents, then you and your family will be involved in a probate proceeding known as a guardianship and conservatorship. This is the court proceeding where a judge determines who should make these decisions for you under the ongoing supervision of the court.

What is a Revocable Living Trust?

This is an agreement with three parties: the Trust-makers, the Trustees (or Trust Managers), and the Trust Beneficiaries. For example, a husband and wife may name themselves all three parties to create their trust, manage all the assets transferred to the trust, and have full use and enjoyment of all the trust assets as beneficiaries. Further “back-up” managers can step in under the terms of the trust to manage the assets should the couple become incapacitated or die. Special provisions in the trust also control the management and distribution of assets to heirs in the event of the trustmaker’s death. With proper planning, the couple also can avoid or eliminate death taxes on their estate. The Revocable Living Trust may allow them to accomplish all this outside of any court proceeding.

Who Should Have a Revocable Living Trust?

Whether you are young or old, rich or poor, married or single, if you own titled assets such as a house and want your loved ones to avoid court interference at your death or incapacity, consider a revocable living trust. A trust allows you to bring all of your assets together under one plan.

What happens if I pass away without a will?

When you create a last will and testament, you empower yourself to make crucial decisions in the event of your passing. If you pass without a will, your loved ones could be left with a headache at best, and serious legal issues at worst.

First and foremost, after you pass without a will, your loved ones would have to endure what’s called the “probate” process in court. During this process, without a will, the court would have no way of knowing your personal desires. It would be the court and predetermined laws – NOT your loved ones – that would decide who gets your assets, and this could lead to distributions that you may not expect or want.

Probate is also an expensive and lengthy process that can cause immense strain on the people you leave behind. To give you a brief idea, the attorney’s fees for a California probate case would generally be 4% on the first $100,000 of all your assets when you pass. In some circumstances, the fees can be even higher, and with estates above $25 million, the fees are court-determined. Probate can take years to complete.

One of the many goals of proper estate planning is to avoid probate. A proper estate plan should generally not consist of a will only, because your loved ones will still end up in probate. Instead, we would create a living trust in addition to your will in order to avoid probate. This is why estate planning must include a multitude of documents, each of which protect various wishes in different ways. A comprehensive estate plan includes a will, trust(s), financial power of attorney, medical power of attorney, and certificate of trust(s), to name a few.

But I'm not wealthy. So I don't need estate planning, right?

It is a very common misconception that estate planning is only for people who are wealthy. It’s important to know that estate planning is about empowering yourself to make crucial decisions about your assets and even your health when the time comes. There are countless other reasons everyone needs estate planning. For example, if you have minor children, it’s critical to prepare decisions regarding their care after you pass.

Put simply, a person’s “estate” is everything they own at the time of their passing. If a person fails to prepare proper estate planning, they will not be able to decide what happens to their property after they pass.

Property can either be “real” or “personal”. “Real property” refers to real estate. Did you know that “personal property” refers to essentially anything else you own? For example, this includes money in your bank account, your car (if owned), your furniture, your favorite jewelry and clothes, your phone and electronics, and even your pets. If you do not have estate planning, you will not be able to decide what happens to those things after you pass.

But estate planning is not just about property. What happens if you become incapacitated? What happens if you pass away and have children under the age of 18? Questions like these should be resolved through estate planning. If they are not resolved, you or your loved ones can be put in complicated, painful situations.

What is the "bare minimum" I can do for estate planning?

Estate planning is a highly personalized process, which is why it is so important to collaborate with an estate planning attorney and create a plan that’s right for you.

We generally believe that having a last will and testament only is not an ideal estate plan. For example, having a will only would still force your loved ones to enter the court’s probate process, which can is costly and time-consuming.

In a very general sense, our “bare minimum” for estate planning would include the following documents:

  • Last Will and Testament
  • Revocable Living Trust
  • HIPAA consent form
  • Advanced Health Care Directive (also known as a “Living Will”)
  • Financial Power of Attorney
  • Medical Power of Attorney
  • Certificate of Trust
  • Assignment of Personal Property

You may not be familiar with every document on this list, but each document that we prepare helps protect your interests in different ways. For example, among other functions, a revocable living trust will help your loved ones avoid the probate process. As another example, in the event of an unexpected health issue, a HIPAA consent form would ensure that your loved ones would be able to get necessary information regarding your condition or treatment from a doctor or hospital.

On the whole, your estate planning is about ‘big picture’ thinking and thus consists of many different components. Again, since people are in different situations and have different needs and interests, it is important to consult with an attorney to find out which documents are appropriate for your estate plan.

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